Unemployment grows as jobless benefit funds run dry

It's an old saying that when the U.S. economy sneezes, the rest of the world catches the flu. The same could be about the South, especially now: A nation-wide economic crisis is taking an especially heavy toll on Southern states.

We'll know just how bad the situation is when the Bureau of Labor Statistics releases a new round of unemployment statistics this week. But as of last month, Southern workers were facing the brunt of rising unemployment, with nearly half of the states with the highest jobless rates being in the South:

RANKINGS: States with highest unemployment rates
September 2008 figures, released October 21

1 - Rhode Island - 8.8%
2 - Michigan - 8.7%
3 - Mississippi - 7.8%
4 - California - 7.7%
5 - Nevada - 7.3%
5 - South Carolina - 7.3%
7 - Ohio - 7.2%
7 - Tennessee - 7.2%
9 - Kentucky - 7.1%
10 - District of Columbia - 7.0%
10 - North Carolina - 7.0%
12 - Illinois - 6.9%
13 - Alaska - 6.8%
14 - Florida - 6.6%
15 - Georgia - 6.5%

Worst of all, the spike in unemployment comes at a time when state unemployment insurance coffers are running dry. A recent report found that in 19 states, unemployment trust funds were insolvent, nearly insolvent or only "marginally solvent." [pdf] These included South Carolina (insolvent); and Arkansas, Kentucky and North Carolina (nearly insolvent).

That means that to pay benefits to jobless workers, state governments will have to infuse their unemployment trust funds with additional cash. But states are already strapped for cash, thanks to a steep decline in tax revenues from the ailing economy.

Maybe unemployed workers could use a bailout.